Yes, that dreaded word “credit crunch” keeps coming up left, right and centre. We are all trying to save a few pounds. Maybe cut back on the takeaways or meals out. Stop using the dishwasher or tumble dryer. There are lots of ways to save money. The strangest thing I’ve heard though is people cancelling their insurance policies to save a few pounds.
First things first, some insurance policies are compulsory. If you drive a car, you must have car insurance and if you employ someone, you must have employers liability insurance. You cannot cancel these policies otherwise you will be breaking the law. Ignoring these obvious ones, people are cancelling things like their home insurance or travel insurance and taking a chance that nothing will go wrong.
I cannot stress more that this is ridiculous. If you cancel a policy, at best you are going to get back what premium is left for the remainder of the policy term. Most insurers though will impose some sort of cancellation fee which they are entitled to do as when you took out the policy, you were, in most cases, entering into an annual agreement.
Okay, but your still getting money back right? Well yes, but the biggest thing here is what if something goes wrong? You’ve just cancelled you policy and now you are considerably out of pocket as you have no insurance cover in place.
There is no solution here other than to find something else to save money on. Some people would say reduce your cover but this is almost as bad as cancelling your cover. Change your car insurance from comprehensive to third party, change your home insurance from accidental damage to standard cover, the list goes on. The thing is, you took out the cover for a reason which is in case you need to claim. If you need to save money then chances are you can’t afford to fix one of the problems that this insurance is covering in the first place.
In these times, we should not be thinking how to save money by stopping our insurance policies but instead checking that we are adequately covered for things that we cannot afford to sort out ourselves if things go wrong. If this means taking out additional policies, then do it. Better safe than sorry!